$2.3bn 'lost' in Senate rush

Page Tools

Parliament was thrown into disarray yesterday after the Senate inadvertently voted to abolish a $2.3 billion tax for high earners as it rushed to clear a backlog of legislation before the winter recess.

After securing the votes of the four key independent senators, the Government had hoped to squeeze through its controversial plan to progressively cut the superannuation surcharge from 14.5 to 7.5 per cent by 2006-07.

But the plan hit a snag when Revenue Minister Helen Coonan's office realised an amendment by Tasmanian independent senator Shayne Murphy mistakenly cut the surcharge completely from 2006-07.The amendment was to reduce the surchage only to 10 per cent.

"I rang them a few times to ask if it was OK," Senator Murphy told The Age yesterday. "They told me it had been sent to Treasury for checking. Then we voted for it and it passed."

The surcharge, expected to raise $2.3 billion over the next four years, was introduced in 1996 to prevent high earners from getting excessive tax breaks through their superannuation. It currently cuts in at 1 per cent on earnings of $94,691 a year, rising to 14.5 per cent for people earning $114,981 or more.

AdvertisementAdvertisement

The embarrassing blunder was revealed when the parliamentary secretary to the Treasurer, Ross Cameron, rejected the bill in the lower house - where the Government has a majority - sending it back to the Senate.

Late last night the Senate passed the bill with the correct amendment, the tax being 10 per cent by next July.

Senator Coonan immediately blamed Senator Murphy, promising immediate action. "The Government has not sought to take advantage of this error and has put in place steps to allow Senator Murphy to correct his amendment," Senator Coonan said.

In a series of marathon sessions often stretching late into the night, the Senate this week tackled 70 pieces of legislation, including a tough new corporate accountability regime, laws to raise prescription drug prices and an extension of the superannuation co-contribution scheme for low and middle earners. For every $1 a low earner contributes to a superannuation fund, the Government will provide $1.50, up to a maximum of $1500 a year.

The Senate will take the unusual step of sitting on a Saturday to clear the legislative backlog - the first weekend sitting in nearly seven years. The move fuelled speculation that the Government is trying to clear the decks to avoid another session of Parliament in case it decides on an early election.

The Government finally won support for its corporate reform package after Labor and the Australian Democrats backed down on a host of proposed changes.

Mr Cameron said the legislation would improve disclosure, auditor independence and enforcement arrangements.

"It will set Australia at the forefront of international practice in corporate governance," he said.